Empire Co. Ltd., the parent of Sobeys, has taken a $1.3 billion impairment charge over its disastrous acquisition of Safeway in western Canada three years ago. The hint of serious problems arose last fall when Empire announced massive difficulties integrating Safeway stores into its sales and inventory systems. Empire shares plummeted close to 10 per cent Wednesday as the firm conceded there is much work to be done in order to remedy problems in its supply chain, rationalize private labels and try to squeeze a profit out of the disappearing margins of the grocery business.
INSTRUCTIVE STORY
It is an instructive story for those wondering why Whole Foods isn’t just keen as can be to open a store at 1860 Bayview. In a word, it is a rough business and the competition isn’t getting any easier. “It’s not simple promotional fixes that will get the job done,” Empire CEO Marc Poulin told analysts. “It’s more fundamental changes that will adapt the business for our customers.” Empire, second largest grocer after Loblaws, has suffered amid stiff competition from lower-priced discount chains such as No Frills and Walmart.
